How long could you make it?

Wednesday

Feb 27, 2013 at 7:04 PM

Don't tell anyone the answer to this question, but knowing the answer — the honest answer — is very important to you: If you lost all sources of income or faced a financial emergency, how many months could you survive at your present standard of living?

Charles MosleyGuest Columnist

Don't tell anyone the answer to this question, but knowing the answer — the honest answer — is very important to you: If you lost all sources of income or faced a financial emergency, how many months could you survive at your present standard of living?How many months could you pay your mortgage or rent? Car note and insurance? Utilities (electric, gas, water, phone, internet and cable)?How many weeks could you buy food?How much cash do you have in your wallets or purses? Hidden in the cypress tree? In your savings account(s)? In your checking account(s)?Do you have cash value on an insurance policy?Do you have liquid assets — possessions that can immediately be converted into cash — like jewelry, stocks, gold or a coin collection? Art and antiques are not considered liquid assets because it takes too long to find a buyer and convert to cash.Of course, if you don't mind taking a severe haircut, then these items could be liquid assets.Your car is not a liquid asset because you will need it for mobility to find another source of income.If you have more than one vehicle, all the others can be considered liquid assets as long as there are no mortgages, they have been reasonably maintained and they are not painted some weird color and customized in a manner that only your mother's child can love.However, be ready to get hosed when you have to quickly sell a car. Real estate is not considered a liquid asset since it takes too long to sell.Your home is not a liquid asset because you are going to need a roof over your head. Equity in anything doesn't count since that is a form of loan, which is piling on debt and opposite to your purpose.Anyway, if you have lost your sources of income or are in deep debt, a bank is going to be hesitant about loaning you money on any equity or collateral — unless it's your daddy's bank.Your answer determines if you are on the asset poverty scale.Asset poverty is defined as not having the liquidity to be able to survive more than three months if all sources of income were lost or a severe financial emergency struck.A study done by the Ford Foundation and Corporation for Enterprise Development determined that 37 percent of all Louisiana residents are asset poor. But it is the breakdown of that 37 percent that is jolting.Those likely to suffer asset poverty based on education level: 45 percent of high school graduates; 39 percent with a two-year degree or some college; 22 percent with a bachelor's degree; and 13 percent with advanced degrees. The breakdown of asset poverty based on family status is chilling: 19 percent of married households; 41 percent of married households with children; and 60 percent of single-parent households.When household incomes are used to evaluate those likely to be asset poor, the numbers are bleak: 59 percent of households with incomes under $25,000 and 43 percent of households with incomes between $25,000 and $45,000. Households with incomes greater than $75,000 have only a 10 percent asset poverty rate, and the asset poverty rate decreases as income rises, but it does not disappear. Households with incomes of $100,000 have a 6 percent asset poverty rate.Like the saying goes: “In for a penny, in for a pound.” So, I have to cover the statistic that frosts me. Fifty percent of black Louisianans are likely to be asset poor as compared to 22 percent of white Louisianans. That is no coincidence judging from the absence of blacks given opportunities in higher-paying management positions in Thibodaux and other city governments; Terrebonne and Lafourche parish governments (except the Lafourche Sheriff's Office); Nicholls State University and Fletcher Community College; the 17th and 32nd Judicial Districts; Thibodaux, Terrebonne and the other hospitals; and the major manufacturers like John Deere, Bollinger and other shipyards.Here's my analysis of all this. Acquiring an education is the best hedge against poverty. The threshold household income to avoid asset poverty is $50,000. Households should only have one child — or one dog — for each $50,000 of household income. And, oh yeah, it doesn't hurt to be white in Louisiana.Also, now you know how much stuff you have that ain't worth a dime.

Charles Mosley, a former head of the Lafourche NAACP, lives in Thibodaux. Email him at charlesmosley3@hotmail.com.

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